The True Cost of Network Ads Drops

New analysis by TargetCast tcm finds cost of primetime spots declined slightly, despite nets' claims of getting higher CPMs

NEW YORK, September 5, 2007 -- A new study by the independent media agency TargetCast tcm finds that the actual prices paid for network primetime advertising were lower in the 2006-7 season than they were for the previous year. The analysis shows the average unit cost for a primetime spot declined by 0.7 percent, to $132,970 versus 2005-6.

The TargetCast tcm analysis, using syndicated research and tracking data from the NetCosts™ system, examines actual reported spending for primetime ads on ABC, CBS, NBC and FOX to compute an average unit cost for each network. Based on the study, NBC took the biggest hit, with a 16.2 percent decline from last year, followed by CBS, with a 3.7 percent drop. ABC's average unit cost increased by 3.8 percent, and FOX enjoyed a 25.8 percent jump in its average primetime unit cost.

During the same period, average primetime Adult 25-54 ratings dropped 14 percent for the four networks. All four networks saw their average ratings decline.

"For several years, agencies and advertisers have been calling for more fairness and accountability in network television pricing," said Steve Farella, CEO and co-founder of TargetCast tcm. "We believe our analysis helps establish a more realistic yardstick for advertisers and their agencies to, armed with more accurate and complete data, better negotiate with the networks. A fresh approach is needed to the annual upfront pricing game."

Less money was spent overall in the 2006-07 upfront versus the previous year for several reasons, the agency says, among them was the fact that several high profile, large spenders were disenchanted with the upfront terms, at the time, and declined to participate in the broadcast upfront buying process.

TargetCast tcm was founded five years ago by Farella and Audrey Siegel. With a staff of more than 50, the company serves a diverse range of strong independent brands including TIAA-CREF, Wyeth Consumer Healthcare, Wyeth Pharmaceuticals, Wyeth Animal Health, Ruby Tuesday Restaurants, 1-800-Flowers.com, The Wharton School, Dominican Republic Tourism, MSG Network, and Muscular Dystrophy Association.

TargetCast tcm will be added in September to the Inc. 500 list of America's fastest-growing private companies.

The NetCosts™ system, a service of Tarrytown, N.Y.-based SQAD Inc., compiles confidential data from agencies and in-house buying systems to provide a comprehensive database that brings transparency to the national television marketplace and enables advertisers and their agencies to understand, based on real transactions, the unit price relationship with each network and to measure future costs. SQAD is a registered trademark of SQAD Inc., and NetCosts is a trademark of SQAD Inc.

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